Package delivery giant and U.S. economic bellwether FedEx Corp said on Thursday it was taking market share despite a recession that drove its profit down 75 percent, and its shares jumped.

If this is what FedEx can do in really tough times, imagine what they can do when things bounce back, said Sandeep Kar, a transportation analyst at consulting company Frost & Sullivan. They are going to emerge as a lean and mean company that will experience rapid growth.

This is a good stock to get into, he added.

FedEx shares rose more than 5 percent in early trading.

The Memphis-based company reported net income for its fiscal third quarter, ended February 28, of $97 million, or 31 cents a share, down from $393 million, or $1.26 a share, a year earlier. Analysts had expected 46 cents a share, according to Reuters Estimates.

Our financial performance was sharply lower during the quarter due to the global recession, Chief Executive Fred Smith said in a statement. While we are gaining market share in all of our transportation segments, the downturn in our industry and the severity and expected duration of the recession require that we take additional actions.

Analysts said a drop in profit against a backdrop of a sliding economy was to be expected.

FedEx's results are not much of a surprise given the current environment, said Dan Ortwerth, a research analyst at Edward Jones. But this is a wake-up call for us that things are not going to get better any time soon.

It's a fairly clear indication that the recent stock market rally better have a strong foundation than merely a positive near-term outlook, he added.

Like its main rival, Atlanta-based United Parcel Service Inc, FedEx is considered a bellwether of U.S. economic activity. When the economy does well, companies and consumers ship more goods; in a recession, package volumes drop.

FedEx is an asset-intensive business and it's hard for them to escape plunging volumes, said Keith Schoonmaker, an analyst at Morningstar. FedEx can't outrun those numbers, but they are doing everything right to manage through this downturn.

FedEx said third-quarter revenue fell 14 percent to $8.14 billion.

For the current quarter FedEx said it expects to earn between 45 cents to 70 cents a share, below the average of 72 cents expected by analysts.

The company said it was cutting capacity at its FedEx Express and FedEx Freight units, and reducing personnel and work hours.

FedEx said the measures would result in fourth-quarter charges of roughly $100 million and lead to a reduction in expenses of about $1 billion in its 2010 fiscal year.

In December, the company said it had suspended paying matching contributions to its 401 (k) retirement plan for a minimum of one year as of February 1 and would implement pay cuts for all salaried personnel. Smith took a 20 percent pay cut.

Both FedEx and UPS have seen package volumes hit by the downturn. Deutsche Post unit DHL shut down its U.S. domestic service in January with the loss of 9,500 jobs, citing the economic slump and its inability to take market share in a market dominated by FedEx and UPS.

Edward Jones analyst Ortwerth said while FedEx's results reflected the recession, the fact the company is still taking market share is a positive sign.

In a sense these are good times for FedEx, he said. I'm not worried about them because they work well in downturns.

In trade on the New York Stock Exchange FedEx shares were up more than 5 percent at $45.23. UPS shares were down more than 1 percent at $46.01.

(Reporting by Nick Carey, editing by John Wallace, Dave Zimmerman)

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